Working Families Blog is the official blog of New York Working Families, covering issues and politics important to the working families of New York.

Thursday, October 05, 2006

Benefits to a higher minimum wage, part 407

I came across an article by Susan Hansen on TomPaine.com talking about a higher minimum wage and the economy that I'd like to share. If you don't read the whole thing, here's the key part:

"[S]tates leading in manufacturing exports - such as Washington - or foreign direct investment - California and New York - are the states that pay higher wages. But states such as Arkansas, Idaho and West Virginia - which have cut their labor costs most drastically since the 1970s - rank in the lowest quartiles in terms of exports. Higher state labor costs are also associated with faster growth in gross state product, education levels, productivity and personal income.

International data support these conclusions as well. According to the World Competitiveness Index, the most competitive country in the world is Finland, and the other Scandinavian "welfare states" with generous unemployment and health care policies also rank in the Top 10. Countries such as Estonia, Ireland, Singapore, and South Korea, which have invested heavily in education, have also attracted high levels of foreign investment.

What about jobs and employment? My research showed that trends in state labor costs have little impact on unemployment rates, which remain higher in central cities and in isolated rural areas. Despite its drastic cuts in state labor costs, West Virginia still has the nation's highest unemployment rates. Job growth is modestly greater in states with lower labor costs. But many of these jobs are part-time, low-paid and offer few, if any, benefits. Thus declines in state labor costs are associated with a number of negative social outcomes: higher rates of crime, poverty, suicide, divorce and births to single mothers. Creating a few more low-paid jobs does not counter these adverse trends.

Congress and the presidency, firmly under Republican control, may invoke international competition and "globalization" to justify their refusal to raise the minimum wage and for shifting the tax burden from wealth and capital to workers' wages. But in many states, political officials have made other choices: to increase the state minimum wage, to enact the Earned Income Tax Credit to benefit the working poor, to expand rather than restrict access to workers' compensation and unemployment benefits. The global economic system is not a static, immutable force over which we are powerless. Indeed, it is the officials we elect who can influence how the costs and benefits of globalization are distributed."

Read this sentence again: "Higher state labor costs [read: a higher minimum wage and better benefits] are also associated with faster growth in gross state product, education levels, productivity and personal income."

Here in New York, the Working Families Party was able to muscle through a minimum wage increase. We took heat for it, including from some surprising quarters, but we did it because it made working families lives better and because it bettered the state.

Congress needs to follow suit. Republicans running for Congress this year have had the chance to raise the minimum wage, and they haven't done it. That's something to think about when you go to vote.